Professional Documents
Culture Documents
McGraw-Hill/Irwin
11-2
11-3
Global economies
Most firms today are impacted
by global economies
Global sourcing of materials or
products
Global customers who want to
purchase
Common objectives to go
global include
Increasing revenue through
access to new markets
Increasing production capacity
Reducing direct cost using
cheaper resources and labor
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11-5
Europe
GDP (Millions)
1,510,957
Logistics as % of
GDP
8.50%
89,676
1,088,128
8.24%
United States
1,173,720
14,264,600
8.23%
Region
1,391,885
16,863,685
8.32%
Austria
25,907
415,321
6.24%
Belgium
46,749
506,392
9.23%
Czech Rep
16,418
217,077
7.56%
Denmark
22,423
342,925
6.54%
France
188,005
2,865,737
6.56%
Germany
341,371
3,667,513
9.31%
GrBritain
169,947
2,674,085
6.36%
Greece
51,770
357,549
14.48%
Hungary
8,721
156,284
5.58%
Ireland
22,122
273,328
8.09%
Italy
152,238
2,313,893
6.58%
Country Name
Canada
Logistics (Millions)
128,490
Mexico
11-6
Figure 11.1
Generic International Strategies
High
Force
Towards
Global
Integration
Low
Global
Strategy
No
International
Strategy
Transnational
Strategy
Multi-domestic
Strategy
Low
High
Source: Fitzsimmons, James and Mona Fitzsimmons (2011). Service Management: Operations,
Strategy and Information Technology, Seventh Edition (New York: McGraw-Hill). Pg. 352.
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Disadvantages
Growth limited to local markets
Not easy to respond to globally
based customers
Not large enough to take
advantage of economies of scale
11-8
Disadvantages
Not scalable
Not easy to respond to globally
based customers
11-9
Disadvantages
Not scalable
Not easy to respond to globally
based customers
Limited synergies when working
with global customers
Limited drivers for global data
and processes
11-10
Disadvantages
Requires substantial coordination
and information integration
Reduced ability to respond to
market uniqueness
11-11
NASA photo View of the Earth seen by Apollo 17 crew traveling toward the moon
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11-13
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11-15
Table 11.3
Differential Characteristics of Global Services
Development
Stages
Service
Focus
Marketing
Strategy
Delivery
Strategy
No
international
strategy
Standard
product for
local market
Single
strategy
focused on
local market
Direct to customer
Single simple
financials
Operated by
entrepreneur with
limited specialization
Multi-domestic
strategy
Domestic
marketing
and delivery
Domestic
customers
Collaboration
Transaction
driven with
integrated
financials
Management with
home country focus
Global strategy
Local market
customization
Focused
specific
market areas
which may
cross
international
boundaries
Subsidiaries with
local presence
Decentralized
operations with
local profit
responsibility
Limited top
management with
international
experience
Transnational
strategy
Global
branding and
integrated
operations
Global
customers
Worldwide flow of
key resources
Centralized
planning in global
sites
International training
and experience
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11-17
11-18
11-19
Performance cycle
structure
Transportation
Operational considerations
Information systems
integration
Alliances
11-20
Communication delays
Financing requirements
Special packaging requirements
Ocean freight scheduling
Slow transit times
Customs clearance
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Demand
Diversity
Distance
Documentation
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Import tariffs
Freight forwarder
Warehousing fees, Port handling
Risk and Security
Transit Time Uncertainty
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International
Cost
Transport mode
Inventories
Lowerlevels,reflectingshort-order,lead-time
requirementsandimprovedtransportcapabilities
Higherlevels,reflectinglongerleadtimesand
greaterdemandandtransituncertainty
Agents
Modestusage,mostlyinrail
Heavyrelianceonforwarders,consolidators,and
customsbrokers
Financial risk
Low
High,owingtodifferencesincurrencies,inflation,
levelsandlittlerecoursefordefault
Cargo risk
Low
High,owingtolongerandmoredifficulttransit,
frequentcargohandling,andvaryinglevelsof
infrastructuredevelopment
Government
agencies
Administration
Primarilyforhazardousmaterials,weight,safety
laws,andsometariffrequirements
Manyagenciesinvolved(e.g.,customs,commerce,
agriculture,transportation
Minimaldocumentationinvolved(e.g.,purchase
order,billoflading,invoice)
Significantpaperwork;theU.S.Departmentof
Commerceestimatesthatpaperworkcostforan
averageshipmentis$250
Communication
Voiceandpapercostlyandoftenineffective;
Voice,paper-basedsystemsadequate,with
growingusageofelectronicdatainterchangeand movementtowardelectronicinterchangebut
variationsinstandardshinderwidespreadusage
Internet
Culturaldifferencesrequiresignificantmarketand
productadaptation
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Truckload
Order
Fulfillment
Manufacturing&
PackagingProcess
Option2:PurchaseinChina-OceanShipment
40Ocean
Truckload
Cntr.
Supplier
China
Warehouse in
Supplier
Southern USA
Manufacturing&
PackagingProcess
Customer
Warehouse
Inspection
Process
Customer
Warehouse
Order
Fulfillment
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Truckload
Supplier
Warehouse in
Southern USA
Customer
Warehouse
Inspection
Process
Smaller Shipments
Order
Fulfillment
???
USA Cost
2.40
0.70
1.32
N/A
2.00
0.35
2.40
0.70
1.32
0.15
1.00
0.18
3.75
0.87
N/A
0.15
1.43
0.08
11.39
7.41
N/A
11.39
14.81
0.74
0.19
8.34
10.84
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China Cost by
Ocean China Cost by Air
2.40
0.70
1.32
N/A
2.00
0.35
2.40
0.70
1.32
0.15
1.00
0.18
2.40
0.70
1.32
0.15
1.00
0.18
3.75
0.87
0.15
1.43
0.15
4.63
N/A
0.08
11.39
7.41
10.53
N/A
11.39
14.81
0.74
0.19
8.34
10.84
0.74
0.19
11.46
14.90
N/A
0.82
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Retailers
Wholesalers
Manufacturers
Suppliers
Service providers
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Eastern Europe
Latin America
Africa
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